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ACCA Applied Knowledge · Management Accounting · Spreadsheets

Which of the following is the main advantage of using a spreadsheet for 'what-if' analysis in budgeting?

The main advantage is that changing one input cell automatically recalculates every formula that depends on it, letting accountants quickly test different scenarios. A spreadsheet does not ensure accurate assumptions, validate data or prevent formula errors, so those still need review.

  1. AIt removes the need to validate input data
  2. BChanging one input automatically recalculates all dependent formulasCorrect
  3. CIt guarantees that the forecast assumptions are accurate
  4. DIt prevents formula errors from occurring

Explanation

Spreadsheets link formulas to input cells, so altering an assumption such as sales volume updates all dependent results immediately, enabling quick scenario testing. They do not validate data, make assumptions accurate, or prevent formula errors; users must still check these.

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